China Delivers Crude Supertanker To Iran

Tyler Durden's picture

The US takes... and China makes. With the Western world doing all it can to cripple the Iranian regime with embargo after embargo, desperate to provoke the country into an offensive move that would be promptly retaliated as a move of "liberation", Iran, which in a few short months has achieved just what all the Western central banks have been desperate to do and see its currency collapse to record lows, continues to find eager allies in the unlikeliest of places. Namely China, which today delivered the first of 12 crudesupertankers to Iran " giving Tehran extra capacity to transport its oil to Asia as it struggles against Western sanctions, but it is unclear if the ship has the permits necessary to call at global ports." What is most amusing is the glaring override of the western isolation of Iran by China, which together with India and Russia, have now become critical trading and strategic partners of Iran, a consideration which any offensive moves by Israel or the US will most likely need to factor in.

This is where the Iranian tanker fleet was, and where it will be courtesy of China:

From Reuters:

Asian countries including China, India and South Korea are among Iran's biggest oil customers, but, to get around a European Union ban on shipping insurance imposed since July 1, they must use the fleet of the National Iranian Tanker Co. (NITC) to bring the crude home.

 

Shipments, however, have become unpredictable as NITC's limited shipping capacity is overstretched, and industry sources said the arrival of the 318,000 deadweight tonne "Panda" in the Gulf in early October may help ease the strain.

 

The very large crude carrier (VLCC) left Waigaoqiao Shipbuilding on Sept. 18. It was initially due to sail to Iran in May, but the sanctions delayed its delivery. A second vessel, the Souvenir, is conducting sea trials in China, but it is unclear when it would begin commercial operations.

 

"The first of Iran's VLCCs is on its way to Iran. It is unclear how the tanker is being insured in light of the Western sanctions, but I'm sure Iran has found a way," said a Singapore-based oil shipping executive who declined to be named as he was not authorised to talk to the media.

 

Western insurers provide indemnity for the majority of the world's tanker fleet. Western sanctions to pressure Tehran to halt its disputed nuclear programme have cut its crude exports by nearly half to less than one million barrels a day.

Europe is confused: what is the point of the embargo if everyone is skirting it, and why does nobody fear the "developed west" anymore?

Under a $1.2 billion contract, Waigaoqiao Shipbuilding Co Ltd, a unit of China CSSC Holdings Ltd, and Dalian Shipbuilding Industry Co. Ltd plan to deliver 12 supertankers by the end of 2013 to NITC, which would boost the capacity of its fleet by nearly 40 percent to around 86 million barrels.

 

Seven more VLCCs are scheduled for delivery by the end of this year, with the remaining four being built in 2013, giving Iran greater flexibility to store and transport its oil.

 

Earlier this week the U.S. government officially linked Iran's state oil company to the Islamic Revolutionary Guard Corps, which would enable Washington to apply new sanctions on foreign banks dealing with the company.

 

The U.S. Treasury, however, said there was not enough information to conclude that NITC was linked to the revolutionary guards, which industry sources said boded well for the shipping firm, for now.

 

"NITC will carry on trading and it seems the U.S. government obviously does not want to kill all trade in oil as otherwise, why was NITC not targeted?," said a European industry source. "The big issue will be to what extent will there be sufficient demand from China and India to keep them in the money."

As to who is doing the actual trading of Iran oil, we now know that too: it is Vitol, the world's largest oil trader.

Vitol, the world's largest oil trader, is buying and selling Iranian fuel oil, undermining Western efforts to choke the flow of petrodollars to Tehran and put pressure on Iran's suspected nuclear weapons program.

 

Vitol last month bought 2 million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders, Reuters established in interviews with 10 oil trading, industry and shipping sources in Southeast Asia, China and the Middle East.

 

The Swiss-based firm issued a statement saying Vitol Group is in compliance with all international laws on trade with Iran.

 

"A Bahraini subsidiary company purchased a spot cargo of fuel oil from a non Iranian counterparty in July 2012. The fuel oil delivered under contract was of Iranian origin. Vitol Group companies no longer purchase any product of Iranian origin," Vitol said, without elaborating.

 

Vitol is not obliged to comply with a ban imposed in July by the European Union on trading oil with Iran because Switzerland decided not to match EU and U.S. sanctions against Tehran.

 

The company earlier in the year stopped trading Iranian crude oil from its main European offices before the July 1 EU embargo deadline. But the trading sources said it has continued to deal in Iranian fuel oil from the Middle East.

 

The tale of the cargo of Iranian fuel oil involves tanker tracking systems being switched off, two ship-to-ship transfers, and blending of the oil with fuel from another source to alter the cargo's physical specification.

 

Privately-held Vitol SA is led by its long-time CEO Ian Taylor, a Briton. Taylor was among leading donors to Britain's ruling Conservative Party named in March by the Prime Minister's office as having dined with David Cameron at his private apartment in Downing Street amid the fall-out from a "cash for access" party funding scandal. Britain is a vociferous critic of Tehran's nuclear program and a leading advocate of the EU sanctions.

In short: pretty much nobody (at least not anyone who is solvent and does not rely on US wealth redistribution) cares what Uncle Sam has to say any more whenever money and geopolitcs are concerned. Goodbye Globocop: every reserve status ends some day.